Stablecoins maintain their value by pegging to external references, such as fiat currencies like USDT (Tether) and USDC (USD Coin) , commodities like, PAX Gold, or other cryptocurrencies like DAI. The use cases for stablecoins are expanding rapidly. Their use is expanding, facilitating remittances, acting as settlement layers for fintech firms, and underpinning DeFi lending. Major platforms – including PayPal, SpaceX and Robinhood – have integrated stablecoins, cementing their role in mainstream finance. Stablecoins poised to dominate cross-border B2B transactions According to Matt Hougan, chief investment officer at Bitwise Asset Management, stablecoins are set to dominate the $44 trillion cross-border retail business-to-business (B2B) transaction market within the next five years. Key developments signal this shift, including Stripe’s $1.1 billion acquisition of Bridge, PayPal’s launch of PYUSD rails for 20,000 small and mid-sized merchants, and Bank of America’s announcement of its own stablecoin initiative. As merchants become increasingly comfortable with stablecoins, their use will extend beyond cross-border payments into domestic retail transactions, further cementing their role in the future of global commerce. Stripe’s billion-dollar stablecoin bet Stripe’s purchase of Bridge, a company specialising in stablecoin infrastructure, underscores stablecoins’ growing importance. Bridge provides application programming interfaces (APIs) for currency conversion, transaction management and digital asset issuance. Stripe’s move signals a push into programmable money, reinforcing stablecoins’ role in future financial services. Patrick Collison, CEO of Stripe, noted, "We expected Bridge to grow quickly, but the scale of adoption is beyond what we anticipated. Every fintech now needs a stablecoin strategy." By integrating Bridge’s technology, Stripe is preparing for a future where digital currencies are embedded in everyday finance. Regulation and policy considerations Stablecoin regulations remain fluid. In the US, the government has taken a more supportive stance, with a policy favouring dollar-backed stablecoins while rejecting central bank digital currencies (CBDCs). Earlier this year, President Donald Trump signed Executive Order 14178, which prohibits federal agencies from issuing or promoting a CBDC and establishes a working group to develop a regulatory framework for digital assets. This aims to bolster the dollar’s dominance in digital finance. Meanwhile, regulators in Singapore, Switzerland and the UAE are shaping stablecoin frameworks to ensure transparency and stability. Reserve disclosure requirements and compliance measures will be critical to maintaining trust in the sector. Expanding into payments and BNPL Stablecoins are particularly promising for cross-border payments, where traditional remittance channels remain slow and costly. Companies like SpaceX have adopted USDC payments for Starlink, using stablecoins’ borderless nature to serve remote customers. In the buy now, pay later (BNPL) sector, Klarna is exploring stablecoins to enhance liquidity and integrate with DeFi lending. CEO Sebastian Siemiatkowski, who once dismissed crypto as a “decentralised Ponzi scheme,” now sees stablecoins as a financial innovation with real-world utility. Opportunities and challenges Despite their advantages, stablecoins face several challenges, including regulatory uncertainty, centralisation risks, and transparency issues. Compliance requirements vary across jurisdictions, necessitating robust legal frameworks. Many stablecoins rely on centralised issuers, raising concerns over censorship and counterparty risks. Adequate reserve disclosures and audits are essential to maintaining credibility. For fintechs and digital banks, the opportunities outweigh the risks. Stablecoins unlock new revenue streams through transaction fees, remittances and B2B settlements. Fintechs can also use stablecoins for payroll services, merchant solutions and loyalty programmes. Digital banks, in particular, stand to benefit. By integrating stablecoins, they can process instant settlements, reduce reliance on traditional banking rails, and offer cost-efficient cross-border financial products. Smart contract-based financial products could further entrench stablecoins in digital banking. Banks must adapt or face disruption Traditional banks must integrate stablecoin infrastructure or risk being sidelined by more agile fintechs. Stablecoin adoption is no longer optional for banks seeking to maintain leadership in payments, international transactions and digital finance. Bank of America CEO Brian Moynihan has signalled readiness to launch a stablecoin – if Congress provides regulatory clarity. A move of this scale would accelerate the financial industry’s adoption of digital currencies. The future of stablecoins No longer a niche product, stablecoins are becoming central to digital payments, financial inclusion and DeFi. Stripe’s acquisition of Bridge highlights the need for a stablecoin strategy, both for fintechs and traditional banks. As regulations evolve, stablecoins will shape the next generation of financial services. The message is clear: firms that integrate stablecoins early will gain a strategic advantage in the digital economy. Dom Monhardt is the founder of one-fs.com, a leading fintech and digital banking newsletter in the Middle East and North Africa (MENA).
